Hornberger's Blog

Hornberger's Blog is a daily libertarian blog written by Jacob G. Hornberger, founder and president of FFF.
Here's the RSS feed or subscribe to our FFF Email Update to receive Hornberger’s Blog daily.

Ditch the War on Poverty Forever

by

An article in the New York Times, entitled “The Mismeasure of Poverty,” defends the “war on poverty,” which President Lyndon Johnson declared some 50 years ago. Actually though, as the article’s author, Sheldon H. Danziger, points out, Social Security is also an anti-poverty welfare program. Therefore, although FDR didn’t use the term, the war on poverty actually stretches back to the his administration, when he converted America’s free-enterprise system into a welfare state and a regulated economy.

Danziger’s article provides a fascinating insight into the statist mind.

Danziger denies that the war on poverty has been lost. But at the same time, he doesn’t claim that it’s been won, at least not in the sense that it can finally be ended after 80 long years of warfare. Instead, one gets the distinct impression that Danziger’s position is that the war on poverty is now a permanent part of America’s governmental structure and that everyone ought to just accept it and deal with it.

What’s his justification for defending this long war?

He uses some sort of arbitrary red line for determining whether a person is poor or not. The line is determined by income. The government’s transfer of money lifts many people above the red line, thereby lifting them out of poverty. While there are many people still below the line, without welfare there would be many more people below the line. Therefore, the war on poverty, Danziger says, isn’t hasn’t been lost at all and needs to be continued and even expanded, apparently indefinitely.

Needless to say, Danziger doesn’t confront the fundamental moral issue: Where is the moral legitimacy in forcibly taking money from John and giving it to Peter? No doubt he would recognize the immorality of a thief robbing some rich people and giving the money to the poor. But since it is the federal government doing the dirty deed, the good old moral blind spot that afflicts statists comes to the fore.

But there is another problem with the statist mindset. They have no understanding of how wealth is created. They just assume that wealth is created and then come up with schemes on how to take money from those who are producing wealth and giving it to those at the bottom of the economic ladder. Their ideal, of course, is prosperity (which they call “growth”) and equality, a way of life in which people produce wealth and where the government confiscates it and redistributes it to the poor, with the aim that everyone meets in the middle and makes the same amount of money.

One big problem with the welfare state is that it ends up killing the goose that is laying the golden eggs that are being confiscated and redistributed to the poor. As the government confiscates wealth, a certain number of businesses that are operating at the margin go out of business. The workers decide to join the ranks of the welfare recipients because it’s nice to collect a check without working for it. That removes them from the wealth-producing sector and places them in the parasitic sector.

As the ranks of the welfare recipients grow, the burden on the wealth-producers grows as well. In the beginning, they’re able to handle the burden. But as more and more people join the ranks of the people on the dole, the wealth-producing sector finally begins to teeter. Ultimately, the burden gets so large that the wealth-producing sector collapses, unable to handle the burden of the ever-growing dole-recipient sector.

That’s of course what happened to Greece. It’s also what is happening to American cities that are now in bankruptcy.

For decades, the wealth-producing sector in America has been able to handle the ever-growing welfare-state burden, sometimes even out-producing it. But we’re now at the point where more and more businesses at the margin are closing down. The middle class, which bears much of the welfare-state tax burden, is struggling. Moreover, many rich people are doing nothing more than trying to preserve what they have rather than invest it in new businesses.

In response, the statists are becoming ever more desperate. They yearn for “growth,” which is another way of saying to the wealth producers: “Produce more wealth so that we can confiscate it and give it to the poor!” Not surprisingly, they’re also now resorting to their time-honored way of “stimulating” growth by having the Federal Reserve inject massive amounts of new paper money and artificial credit into the system in the hopes that will inflate a new bubble that will keep things going a bit longer.

It won’t work. We live in a consistent universe. A system founded on immoral means will ultimately go down. It’s just a question of when. Again, look at Greece. Better yet, look at Cuba, which perfectly epitomizes the statist dream — full equality of wealth, with everyone on the verge of starvation.

Americans once had the finest and freest economic system in the history of the world, one in which there was no  income tax, IRS, Federal Reserve, Social Security, Medicare, Medicaid, farm subsidies, foreign aid, and all the other welfare-state programs under which we now live.

When people were free to accumulate wealth, the poor were the ones who most benefited. In fact, many of the poor became the rich.

Americans had discovered that key to ending poverty was to get government out of the charity business. In fact, when people were free to accumulate wealth, there was the greatest outpouring of voluntary charity that mankind has ever seen. That’s how the churches, libraries, opera houses, and soup kitchens got built and run.

Unfortunately, however, it didn’t last. The statists prevailed in their push to move America in a socialist direction. That’s what the war on poverty was all about. The result is a nation of dependent people, frightened of their own shadow, oblivious to moral principles, willing to surrender their liberty to government at the first sign of crisis, and convinced that they are a good and caring people owing to the IRS and the welfare bureaucracies of the federal government.

With the nation hurtling toward bankruptcy owing to out-of-control federal spending, now would be a good time to end America’s disastrous experiment with socialism and to cast the entire war on poverty into the dustbin of history.

This post was written by:

Jacob G. Hornberger is founder and president of The Future of Freedom Foundation. He was born and raised in Laredo, Texas, and received his B.A. in economics from Virginia Military Institute and his law degree from the University of Texas. He was a trial attorney for twelve years in Texas. He also was an adjunct professor at the University of Dallas, where he taught law and economics. In 1987, Mr. Hornberger left the practice of law to become director of programs at the Foundation for Economic Education. He has advanced freedom and free markets on talk-radio stations all across the country as well as on Fox News’ Neil Cavuto and Greta van Susteren shows and he appeared as a regular commentator on Judge Andrew Napolitano’s show Freedom Watch. View these interviews at LewRockwell.com and from Full Context. Send him email.